SOURCE :- SIASAT NEWS
Hyderabad: If a flood, earthquake or any other natural disaster strikes your area, your bank will now be able to automatically offer you loan relief – without you having to ask for it first. You can, however, choose to opt out if you do not need the help.
This is among a set of new guidelines issued by the Reserve Bank of India (RBI) on Wednesday, April 29, that lay out how banks and other lenders must respond when a natural calamity hits. The rules come into effect from July 1, 2026, and apply to commercial banks, small finance banks, local area banks, cooperative banks, Non-Banking Financial Companies (NBFC) and All India Financial Institutions.
What this means for borrowers
Under the new rules, if a calamity is declared in your area, your bank can step in and offer relief measures on its own, including waiving or reducing fees and charges, for up to a year. Borrowers have up to 135 days from the date the calamity is declared to opt out of this relief if they choose to.
Loan accounts that were running normally, or were overdue by no more than 30 days, at the time of the disaster will be eligible for a restructuring or resolution plan. Even if a loan slips into bad debt status between the time of the calamity and the finalisation of a relief plan, it will be restored to a healthy status once that plan is put in place.
What banks must do
Banks whose branches are damaged or destroyed can temporarily operate from other premises, with intimation to the RBI. They are also required to set up satellite offices, extension counters or mobile banking facilities to keep services running in affected areas, and must restore ATM services as quickly as possible while making alternative cash arrangements in the interim.
Note on provisioning
Banks will be required to set aside an additional 5 per cent provision – essentially a financial buffer – for every loan account that is restructured under a calamity relief plan. Some lenders had asked the RBI to reduce or eliminate this requirement, but the central bank held firm, saying the buffer was necessary to account for the higher risk in such accounts.
The RBI had floated a draft of these guidelines in January for public feedback. It said the revised framework was more relaxed than existing rules, even if it did not go as far as some stakeholders had suggested.
(With inputs from PTI)
SOURCE : SIASAT
